Greek Bailout Talks End Without Breakthrough in Brussels

The European Commission said Sunday that weekend talks to find common ground between international creditors and Greece were unsuccessful and left a wide rift that needs to be closed within two weeks to avoid a possible Greek default.

An EU Commission official, who refused to be identified because of the sensitivity of the negotiations, said that “the talks did not succeed as there remains a significant gap between the plans of the Greek authorities and” the demands of the international creditors.

On top of that, the official said that, for the EU’s executive, “the Greek proposals remain incomplete.” The official refused to be more precise.

European Commission President Jean-Claude Juncker “remains convinced that with stronger reform efforts on the Greek side and political will on all sides, a solution can still be found before the end of the month,” the official said.

Finance ministers from the 19 nations using the euro currency have a meeting next Thursday in Luxembourg which has already been billed as decisive to see if a bailout deal for Greece can be found.

The rift after the weekend’s talks amounted to “the order of 0.5-1 percentage of GDP,” the EU official said.

Greek Deputy Prime Minishter Yannis Dragasakis said disagreements remained over the cuts in pensions and increases in value added tax.

However, he said Greece has made “supplementary proposals that totally cover the fiscal gap and primary surpluses” and open “the way to a final deal.”

Greece’s 240-billion-euro ($270 billion) bailout expires June 30, at which point the country will lose access to the rescue loans it desperately needs to repay debts and avoid a default that could force it out of the euro.

The country’s creditors – which include fellow eurozone states, the European Central Bank and the International Monetary Fund – want the country to commit to new economic reforms before they disburse the last 7.2 billion euros ($8.2 billion) left in Greece’s bailout fund.

Fears that the two sides were still too far apart to clinch a deal on such issues as pensions and the budget already saw the main stock index in Athens close 5.9 percent lower on Friday.

The most dramatic sign of an impasse in the discussions came on Thursday, when the IMF sent its negotiators home from bailout talks with Greek officials in Brussels, citing a lack of progress.

Germany’s Economy Minister, Sigmar Gabriel, said his country won’t let itself be blackmailed into a bailout deal with Greece.

Gabriel on Sunday told German public broadcaster ARD that Europe’s patience with Greece is running out.

“A couple of game theorists in the Greek government believe that in the end the fear in Europe that Greece might leave (the euro) is so great that we’ll agree to anything. That’s not the case,” he said.

At the same time, Greece also stuck to a hard line on Sunday, with a government official saying that the country will never accept cuts in pensions and wages or extra taxes on necessities such as electricity.

The official said IMF representatives are insisting on pension and wage savings worth about 1.8 billion euros ($2 billion) and an equal amount of extra revenue from VAT.

“These measures concern the popular classes and employees,” said the official, who spoke on condition of anonymity because of the ongoing talks in Brussels between Greece and its creditors.

He added that Greece will no longer accept measures that undermine growth and has submitted proposals that cover creditors’ demands for a primary budget surplus without doing so.

Without outside help, Greece is unlikely to be able to repay a roughly 1.6-billion-euro IMF debt installment due June 30 and larger debts due to the European Central Bank in July and August.